Expat rates: cuts galore – but there are still some good deals

Expat banks are now following those onshore with rate reductions to their
fixed deals.

Things are getting tougher for savers as more offshore banks have cut fixed rates – with one slicing nearly half a percentage point off its formerly top-paying deal.

As predicted, the expat banks are now following those onshore with rate reductions to their fixed deals. And the biggest cut comes fromClydesdale Internationalwhich has chopped its five-year fixed-rate deal dramatically. It was paying 4.15pc fixed on a minimum of £10,000 but has now cut this to just 3.7pc, a huge 0.45 of a point reduction.

This means that now theLloyds TSB International five-year fixed rate looks even more out of line at 4.3pc on a minimum £10,000. Only a month ago, Lloyds was paying 4.5pc. But even at its current 4.3pc this rate is far in excess of the next best five-year fixed rate of 3.83pc fromPermanent Bank International.

Although this Lloyds TSB rate has only been on sale for a short time, it must surely be at risk of selling out as it so easily beats the opposition.

Furthermore, with absolutely no sign of an increase in base rate on the cards in the near future (and indeed the chance of a cut to 0.25pc still possible) fixing at more than 4pc for five years looks a good deal.

However, apart from the Lloyds and Permanent deals, you’ll get a better deal fixing for three years.

Lloyds TSB International has 3.75pc for this period on £10,000 which is better than the new Clydesdale International five-year rate. Clydesdale is paying 3.35pc for a three-year fixed rate. Three years could be a good time scale for fixing: the money markets are not pencilling in a rise in base rate to 0.75pc until late 2016.

It’s not only five-year fixed rates which have been cut this week – shorter term deals have also been chopped.

This means that the only remaining one-year fixed-rate deal at 3.5pc is now Permanent Bank International which is on a minimum of £20,000.

Even after its latest cut, the Bank of Ireland deal at 3.2pc is still one of the best, even though the rate is on a minimum £25,000.

For savers with less to invest, Alliance & Leicester’s 3.2pc on £5,000 fixed for two years looks good.

Be aware, however, that Alliance & Leicester International usually brings in changes to its fixed-rate deals on the first of every month so this deal could disappear next week.

And the one-year fixed deal from Permanent of 3.5pc must be particularly at risk of selling out – especially as it even looks good compared with current two-year fixed deals. The top two-year fixed rate is also from the Permanent – it is 3.68pc on a minimum £20,000. Not far behind is Lloyds TSB International’s 3.55pc on £10,000 or more.

AIB closure

The winding down of AIB International is gaining pace.

The bank has now written to savers saying that from October 1 it will start automatically repaying funds held in its Privilege and Saver variable rate accounts.

The bank, which announced in the spring that it was to close down as its Irish parent retreats to concentrate on the home market, has not paid any interest on its variable accounts since August 20.

In its latest communication it says that it will transfer savers’ balances plus accrued interest to their nominated bank account. It says that although it is “unable to provide a specific date as to when the account will be closed” it aims to have completed the closure by the end of October.

Savers who want to move their money away from AIB International sooner than that can fill in a withdrawal form and return it to the bank by September 28.

Those who either have not given the bank a nominated account or want to change the details can send a signed instruction to that effect. There will be no charge for electronic transfers.

Those with AIB International fixed savings rates are still getting interest and will not be automatically repaid under this latest scheme. The bank says that it will soon be in contact with fixed-rate savers concerning repayment.